CODING AND REIMBURSEMENT | Health Insurance: A Primer on Navigating Care

By J. Connor Sullivan, Mariah Cheyney, and Anna M. Jilla 

This article is a part of the November/December, Volume 34, Number 6, Audiology Today issue.

What Is (Health) Insurance? 

Insurance is a means of protection against loss, and health insurance protects an enrollee from financial loss from costs of health care (AHIP, 2022). Insurers provide a health insurance policy or contract with health-care enrollees. In some cases, the contract may exist between a third party or an employer. An enrollee must weigh the chance of needing health care with paying for a premium that covers their need.

Important Terms Explained: Premiums and Cost-Sharing

A health policy requires the enrollee to pay a premium, which is a monthly payment required for enrollment in the plan. An enrollee may also have the responsibility of a deductible, which is the amount spent by the enrollee for health services prior to insurance coverage for a service. Copayments may also be required, which are fixed payment amounts required to receive a covered service, or coinsurance, which requires the enrollee to pay a percentage of the covered service. Cost-sharing is a term that includes both copayments and coinsurance (HealthCare.gov, 2022a). 

The out-of-pocket maximum is the most an enrollee will pay for covered services in one calendar year. After the out-of-pocket maximum is met, the insurance company will pay 100 percent of covered services. Health policies define services as covered services or exclusions, which are services not covered by the health policy. For example, some policies may exclude experimental services or services from an out-of-network provider (HealthCare.gov, 2022a). 

Some health services may require a prior authorization, or a management process completed by the insurer to determine if a health service is covered (HealthCare.gov, 2022b). This differs from precertification, which requires the enrollee to notify the health plan before undergoing a certain diagnostic of surgical procedure, and predetermination, when a health plan requires a provider to confirm that a service or procedure is covered.  

How do I determine which costs are paid by the beneficiary and which are paid by the insurer? 

Deductibles, copayments, coinsurance, and out-of-pocket maximum all specify the amount and costs to the beneficiary. A deductible must be spent for health services before the insurance company begins to pay. For example, a deductible of $2,000 would require the beneficiary to pay $2,000 in covered medical costs before insurance would pay their proportion. 

Once the deductible is met, the beneficiary may be responsible for a copayment (fixed amount)or coinsurance (a percentage of the medical services). For example, a beneficiary may be expected to pay a $30 copayment for each office visit or may be responsible for 20 percent of all covered costs. Once the patient reaches the out-of-pocket maximum—the most a patient must spend for covered services under a contract—there are no longer copayments or coinsurances applied for the insured year. After the out-of-pocket maximum has been reached, the insurance company will pay at 100 percent for covered services (AHIP, 2022; HealthCare.gov, 2022a).